Feasibility Study

During May 2015, the Feasibility Study for the Balama Project was finalised. The author and key contributor of the Feasibility Study was Snowden Mining Industry Consultants (Snowden), with input from other technical specialists. A Front End Engineering Design (FEED) study in July 2015 by CPC Engineering Pty Ltd (CPC Engineering) subsequently provided an updated initial capital expenditure estimate and confirmed processing plant operating costs to be consistent with the Feasibility Study estimates.

The Balama Project is a simple, open-pit mining operation with a low strip ratio. Operations will commence as free-dig mining within the high grade pits of Balama West, using conventional truck and shovel mining. The key operational and financial metrics of the Balama Project are summarised in the following table:

Metric  
Operational period 42 years
Plant feed rate 2,000,000 tpa
Average strip ratio (life of mine) 0.04 ratio (1)
Average head grade (life of mine) 16.2% (2)
Average recovery (life of mine) 92.5%
Average productions (life of mine) – 95% TGC 313,000 tpa (3)
Total initial capital expenditure (including 10% contingency) US$144 million (4)
Average operating cash costs over life of mine (5) US$286/t product (FOB) (6)

(1) Inclusive of economic low grade ore ranging from > 2% to < 9% which will be stockpiled for processing in the future.

(2) Whilst this is the average for the life of mine, head grade will be approximately 19% TGC during the first 10 years of production.

(3) Whilst this is the average for the life of mine, production will be approximately 355,000 tonnes during the first 10 years of production.

(4) Updated initial capital expenditure estimate (including a 10% contingency) provided by CPC Engineering

(5) Excluding royalties and taxes.

(6) FOB Port of Nacala.

Mineral Resources and Ore Reserves

In 2013 Syrah announced the largest resource of graphite the world had ever seen at 1.05Bt @10%TGC and 0.23%V2O5 (using a 5%TGC cut-off to 300m depth).

Resource calculations have undergone several iterations. The following list of statements regarding the Resources and Reserves were released to the ASX:

  • 23 January 2013 - Maiden Balama West Mineral Resource – World’s Largest Graphite Deposit with Significant Vanadium
  • 27 May 2013 - Maiden Balama East Resource – Balama Now Contains Over One Billion Tonnes of Graphite Resource at 10.2%TGC and 0.23% V2O5
  • 10 December 2013 – Balama West Resource Upgrade and Clarification
  • 25 March 2014 – Balama East Upgraded Resource
  • 29 May 2015 – Syrah Finalises Balama Graphite Feasibility Study and Declares Maiden Ore Reserve

To date, over 18,000m of resource diamond core drilling has been completed on the Balama Project. As part of the Feasibility Study, a Mineral Resource estimate using a 3% TGC cut-off (constrained within a pit shell) has been determined by Snowden as shown in the following table and was completed in accordance with the guidelines of the JORC Code 2012. The extent of these resource categories can be seen in the following maps for Balama West and Balama East

Classification Tonnes (Mt) Density (t/m3) TGC (%) Contained Graphite (Mt)
Balama West        
Measured 75.0 2.5 11.0 8.4
Indicated 111.0 2.6 8.1 9.1
Inferred 460.0 2.7 11.0 51.0
Balama East        
Indicated 77.0 2.6 14.0 11.0
Inferred 470.0 2.7 10.0 49.0
Total        
Measured 75.0 2.5 11.0 8.4
Indicated 186.0 2.6 11.0 20.1
Inferred 930.0 2.7 11.0 100.0

The Proved and Probable Ore Reserve estimated by Snowden as part of the Feasibility Study is based on, and inclusive of, the above Measured and Indicated Mineral Resources.

Accordingly, the Balama Project contains a combined Proved and Probable Reserve of 81.4Mt at an average grade of 16.2% TGC (using a 9% TGC cut-off grade). This reserve constitutes 13.2Mt of contained graphite, making the Balama Project the world’s largest Reserve of graphite. Snowden notes that the deposit is open along strike at both Balama East and Balama West, as well as at depth.

Classification Ore (Mt) TGC (%) Contained Graphite (Mt)
Balama West      
Proved 20.0 19.2 3.8
Probable 2.6 17.5 0.4
SUB TOTAL 22.6 19.0 4.2
Balama East      
Probable 58.0 15.1 8.9
SUB TOTAL 58.0 15.1 8.9
Total      
Proved 20.0 19.2 3.8
Probable 61.4 15.2 9.3
  81.4 16.2 13.1

Based on the projected average annual production over the life of mine as outlined in the Feasibility Study, there are sufficient Ore Reserves for over 40 years of production (after project ramp up).

A detailed statement of the Mineral Resources and Ore Reserves for the Balama Project can be found in the ASX announcement by the Company dated 29 May 2015.

Metallurgy

The process recovery based on pilot plant results is set at 92.5%, with an average final concentrate grade of 95% TGC. Based on a mining feed rate of two million tonnes per annum, at an average head grade of approximately 19% TGC over the first 10 years of operations, approximately 355,000 tonnes of graphite concentrate will be produced per annum.The final graphite concentrate product will be classified into five particle size classes based on extensive consultation with global graphite end users. These nominal size fractions and scalable production are detailed in the table below.

Product Upper size
(US mesh)
Lower size
(US mesh)
Upper size
(microns)
Lower size
(microns)
Average size
Distribution
Product 1 - 50 - >300 8.5%
Product 2 -50 80 <300 >180 12.0%
Product 3 -80 100 <180 >150 11.5%
Product 4 -100 140 <150 >105 22.5%
Product 5 -140 - <105 - 45.5%

The process plant has been designed with sufficient flexibility to ensure market demand for different particle sizes can be met as markets with different product specifications require.

Processing Plant

The processing plant was designed by Chalieco and Changsha Engineering and Research Institute Ltd of Nonferrous Metallurgy with a mining feed rate of two million tonnes per annum using conventional processes including crushing and screening, grinding, flotation, filtration and drying, classification and screening and bagging.

Regulatory Approvals

Syrah has now received the following key government approvals for the Balama Project.

Approval Grant date Term
Mining Concession 6 December 2013 25 years (renewable)
Water License 22 November 2014 5 years (renewable)
Environmental License 23 April 2015 5 years (renewable)
Land Access (DUAT) Lincese 22 June 2015 23 years (renewable)

Infrastructure

The Balama Project is connected by a bitumen road to the Port of Nacala, some 490km south east of the project. Nacala is a major port in Mozambique and the deepest port in southern Africa. There are twin berths for containers with a total length of 395m as well as four berths for bulk traffic with a total length of 600m. Balama graphite will be packed into one tonne bags, hauled by road to Nacala and then packed into 20 foot containers for export. The Nacala port will be ample for the volumes proposed by the Balama Project.

The port is serviced by major international container carriers. Water for Balama will be supplied from the Chipembe Dam which has a capacity of approximately 25 million m3 and is located 12km from the Balama Project. Syrah’s Water License allows two million m3 of water to be drawn from the Chipembe Dam annually which is sufficient for our demands.

Installation of power lines and transformers for the Balama camp has been completed. Power supply from the main grid remains intermittent. Accordingly, the Feasibility Study for the Balama Graphite Project assumes diesel power will be used for the first five years of operations, followed by connection to the grid thereafter.

Chipembe Dam

Installed power lines and transformers

Bitumen road to the Balama Project